Strategic Management Framework guide - Department of Treasury ...

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Allocate resourcesAllocate Resources involves allocating available resources (funding, equipment and labour)to achieve the goals outlined in plans. This element includes allocating new resources andreallocating existing resources. At the whole of government level, this process primarilyoccurs via the State Budget. At other levels, these processes will occur throughout the year.Key activities• Determine budget capacity and short, medium and long term financial targets.• Consider whether existing resources can be reallocated (see Evaluate element).• Allocate available resources to best meet the organisation’s goals and objectives (seePlanning element).• Identify funding for unforeseen risks or emerging needs (i.e. contingency) and forbusiness case development/feasibility studies for potential future bids.• Confirm and communicate budgets.Key questions• Where resources should be allocated to best contribute to the Government’s objectives?• What different funding options are available?• Have productivity gains been achieved over time such that resources could be freed foruse elsewhere or services increased?• Which activities are no longer relevant to achieving government objectives and whatresources will be made available if they are stopped?• Does the organisation have the capacity to deliver in light of its other activities?Key products/reports• State Budget;• Appropriation Bills;• Internal budgets; and• Strategic/Business/Corporate Plans (i.e. these plans may include references to theallocated resources).GovernmentThe Government allocates funding through the State Budget and related processes. Finiteresources are available to the government each year and central agencies support theGovernment by assessing budget capacity and developing parameters based on estimatesand economic forecasts. The Government therefore selects which proposals for funding willhave the greatest positive impact on the community within the parameters agreed to bygovernment while also considering whether those initiatives receiving ongoing fundingshould continue or if this funding should be reprioritised.6Strategic Management FrameworkMay 2011
Parliament scrutinises the State Budget on behalf of the community before authorising thatfunds be made available. The money authorised in the Appropriation Bills is used to fund (orpurchase) outputs from departments and some entities. These outputs are delivered inorder to contribute to outcomes or objectives. For entities, the State Budget will also impacton resource allocation, through grant funding and through the processes involved inapproving fee and charges variations.Departments and entitiesAs part of the Planning element, Departments will develop funding bids for consideration bythe Government, which reflect the Department’s preferred mix of outputs. Central agenciesprovide recommendations to government on the funding proposals including theappropriateness of the performance measures, mix of services and assets, and the cost ofproposals. Reprioritisation and savings options are also presented.Once the budget allocation has been confirmed, departments undertake an internal budgetallocation process. Department budgets include State funding as well as third party and ownsource revenue. In some circumstances, departments can reallocate funding during the yearand may also seek additional or new funding from government for unforseen circumstancesor new initiatives.Entities not included in the State Budget prepare budgets using the same principles. Thismay involve a process of work groups or divisions preparing bids for funding for newinitiatives or to cover cost pressures which are then considered, prioritised and approved bysenior management, with sign off by the Chief Finance Officer.A number of frameworks support the Allocate Resources element. These include outputprice modelling which ensures that the price government pays for the delivery of the outputis appropriate for the agreed standards of quality and quantity. The Departmental FundingModel (DFM) recognises that cost pressures impact on outputs (e.g. wage and salaryincreases, CPI increases) and provides options for dealing with these pressures. The BaseReview framework also ensures the price paid for outputs is appropriate taking into accountsimilar goods or services provided by others (including non‐government suppliers), thatdelivery of the output is efficient and effective and recognising any productivity gains (seeEvaluate element).The Asset Management Framework (AMF) includes guidelines on the preparation of eachdepartment’s Service and Asset Strategy, specifications on what needs to be included in theMulti‐Year Strategies and Business Case preparation guidelines. These components of theSMF help ensure that the future asset investment responds to an established service need,is appropriately planned and has been rigorously analysed.Strategic Management FrameworkMay 2011 7
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